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Bill Summary · HB 1937

Summary — HB 1937 (Arkansas, 95th General Assembly, 2025)

Status: Died in Committee (per provided record).
Introduced: January 17, 2025.
Primary sponsors: Rep. Jean; Sen. Stone; Sen. Caldwell.
Subject: Property tax valuation of mineral rights and oil/gas production equipment.
Key statute affected: Arkansas Code § 26-26-1110(a).
Effective date (as drafted): assessment years beginning on or after January 1, 2025.

Purpose / Intent

The bill seeks to clarify and expand how producing mineral interests (oil and gas wells) and related production equipment are valued for ad valorem property tax purposes, with the stated intent of promoting consistency and uniformity in valuation.

Major provisions / changes

  • Terminology change: replaces the term “oil well” with the broader term “well,” explicitly defining a “well” to include:
    • liquid hydrocarbons (oil);
    • liquid hydrocarbons associated with gas production;
    • gas associated with oil production;
    • natural gas; and
    • any combination of oil, gas, and other hydrocarbons.
  • Valuation units:
    • Allows county assessors to calculate the value of a well either on the existing per‑barrel-of-oil basis or alternatively on a per‑1,000 cubic feet (Mcf) of gas produced.
  • Expense allowance:
    • Requires a uniform expense allowance applied per barrel of oil or per 1,000 cubic feet of gas (regardless of average daily production), to be based as nearly as practicable on actual expenses per unit produced.
  • Income approach:
    • If using an income approach, income must be based on the actual average price per barrel of oil or per 1,000 cubic feet of gas in Arkansas during the immediately preceding calendar year.
  • Production equipment:
    • Defines “production equipment” to include piping and equipment from the bottom of casing to the sales valve at the tank battery or sales meter.
    • Assesses production equipment as real property at a value of $1.00 per foot (with an exclusion for casing rendered inoperable by cement or mechanical plugs).
  • Treatment of increased production:
    • An annual increase in average daily production is treated as newly discovered property only if due solely to production from a geological zone/horizon not previously produced from that well.
  • Administrative requirements:
    • All formulas, valuation tables, and guidance published by the Assessment Coordination Division (ACD) must comply with the section.

Who is affected

  • Mineral interest owners and working interest holders (oil & gas producers) — potential changes to assessed values and tax bills.
  • County assessors — must adopt new valuation rates and methodologies.
  • Assessment Coordination Division — must develop formulas, valuation tables, and guidance.
  • Local taxing jurisdictions — potential (undetermined) effect on property tax collections.

Fiscal and administrative impact

  • State revenues: DFA Fiscal Impact Statement reports no impact to state revenues.
  • Local property tax collections: impact described as undetermined.
  • Administrative burden: ACD must develop discounted cash flow models and new formulas; estimated minimum one year to develop models and update county assessor software before new rates can be widely used.

Procedural / timeline notes

  • Drafted effective date: assessment years beginning on or after January 1, 2025.
  • The bill text includes an explicit legislative-intent clause (to remedial/clarify).
  • The provided legislative action list contains contradictory entries (motions, committee reports, engrossment, passage/enrollment, and also “Died In Committee”). Users should verify the final status with the official Arkansas legislative record or the Secretary of State / legislative website.
  • Companion bill: SB 266.

If you want, I can prepare a short comparison showing how current law differs from the changes HB 1937 would have made (line‑by‑line impacts on valuation formulas and assessor procedures).

Compiled from official sources — confirm details with the bill’s official record.

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